Major UK banks are increasing legal action against companies that defaulted on taxpayer-backed Covid borrowing, pushing pandemic-era lending into a new phase of debt recovery. Barclays, Starling Bank and HSBC have filed nearly 70 winding-up petitions since June against businesses linked to the Bounce Back Loan Scheme, showing how emergency lending is still affecting UK collections and insolvency.

From emergency support to debt recovery

The Bounce Back Loan Scheme was launched in May 2020 to give smaller businesses rapid financial support during the pandemic. Eligible firms could borrow between £2,000 and £50,000, with the loans backed by a 100% government guarantee. The scheme helped money reach businesses quickly, but lighter checks used during the emergency also created challenges around fraud, error and repa ...